Barley seeds new constructive approach to diplomacy

In 2018, China launched an investigation into Australian barley exports from 2017 to 2018, alleging that Australia was dumping barley into the Chinese market and subsidizing or providing tax incentives that reduced production costs. After 18 months, the Chinese Ministry of Commerce ruled that both dumping and subsidisation had occurred.

As a result, in May 2020, China imposed a combined 80% tariff on Australian barley, which was estimated to be worth $1.5 billion to the Australian economy.

The Chinese Ministry of Commerce said that its domestic industry had suffered substantial damage, therefore, it would introduce an anti-dumping tariff of 73.6 percent and an anti-subsidy tariff of 6.9 percent. Prior to the tariffs, China was Australia’s largest destination for 58% of barley exports of both feed and malting quality.

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At the time of the decision, the Morrison Government led the global push for a COVID-19 investigation, a decision which was to cost one of Australia’s biggest agricultural exports. The then Trade Minister Simon Birmingham said the decision was “deeply, deeply disappointing”. He said that the Government would appeal the matter through the World Trade Organisation and continue to raise the issue with Beijing directly.

The Australian Government appealed the matter through the World Trade Organization and continued to raise the issue with Beijing directly. Initially, the Chinese stopped engaging with Australia diplomatically and refused to take the Australian Trade Minister's call on the matter.

The Chinese Foreign Minister said at the time the trade tariffs were not related to Australia’s call for an independent investigation on the coronavirus, and that the linking of the two issues simply exacerbated already strained diplomatic relations.

China’s ambassador to Australia, Cheng Jingy however had previously warned that calls for the Coronavirus investigation had made Australia a target.

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Fast forward to an election and with a new Minister for Foreign Affairs, Penny Wong, the Australian Government this week has announced it has reached an agreement with China to end the dispute. The agreement is expected to see China review the tariffs over a three-month period, and Australia has suspended its push with the WTO.

The TFGA welcomes the announcement of the review on barley duties, as China is an important market for Australian farmers. The Governments approach to cooperate where it can and disagree where it must, really means that Australia must continue to diversify its overseas markets.

The supply of barley in Tasmania is mostly from imports, which has implications for prices and market demand. One grower we spoke to suggested that there could be increased demand for barley from the mainland, which could potentially lead to a slight increase in prices. However, there is hope for a boost in the local wine and spirits industry if China reopens its market and reduces or eliminates the current tariff. This could create opportunities for growth and expansion in these industries in Tasmania.

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Grain Producers Australia has also welcomed the news, with Chair Bary Large saying the process to reach a resolution would be ‘significantly short’ than if the WTO process continued.

As the National Farmers Federation Chief Executive Officer Tony Mahar said in a statement this week, the real success has been a constructive approach whereby both countries have taken a longer-term perspective for the benefit of both parties and Australian farmers.

Such positive steps to reach an outcome are not only important for barley growers but may also pave the way for barriers to Australian wine and rock lobster to be removed.